Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 278

Cuffelinks Newsletter Edition 278

  •   2 November 2018
  •      
  •   

Last week's edition of The Economist featured Australia, with these words:

"Our cover this week holds out Australia as an example for the world. Rising incomes, low public debt, an affordable welfare state, popular support for mass immigration and a broad political consensus: in most of the rich world such blessings are a distant dream, in Australia they are a proud reality. The country has been growing for 27 years without a recession. The public finances are in excellent long-term shape. Half of Australians are either immigrants or the children of immigrants."

The article on "the most successful rich economy" is here. Does it feel so wonderful from this side of the planet? Surveys reveal 60% of Australians want cuts to immigration, we have the world's highest private debt to GDP ratio which the Reserve Bank has highlighted as a major risk, private sector wages have not risen for six years, and we've had five Prime Ministers since 2013. If we have a "broad political consensus", we make little progress on tax reform, climate change and power prices. Just today, UNICEF issued The Children's Report, showing one in six children in Australia live in poverty.

Stephen Grenville of the Lowy Institute says The Economist does not have a great track record on Australia. In 1995, four years into the 27 years of expansion and just after Mexico had experienced a currency collapse and deep recession requiring an IMF bailout, The Economist predicted: "Australia - the next Mexico".

Returning from overseas

On a brighter note, it's always good to come home and I've just returned from Europe. Italy is portrayed here as a basket case but it was vibrant and busy. Malta is booming, overrun with tourists. I've written a note on three points that struck me. BTW, topping up with €1,000 cash before the trip cost me $1,640 at money changer UAE Exchange, which at the same time would have cost $1,740 at CBA and a terrible $2,050 at the airport. How many people spend hours researching hotels and flights but little time on the best way to make the payment? 

When playing tourist, it's easier to ignore the noise of the stock market. It seems to matter less that the S&P500, NASDAQ and S&P/ASX200 were all down around 10% from their peak. This must be how Warren Buffett feels when falls become buying opportunities. 

Elsewhere in this week's edition ...

Roger Montgomery gives an excellent summary of the coming 5G networks and potential investment opportunities. For those nervous investors who have not been distracted by holidays and are worried about the market, Tim Fuller gives a simple guide to investing for the long term. Nicole Connolly explains the consistency of infrastructure assets and particularly airports

The traditional relationship between US and Australian interest rates is currently reversed, and Stephen Cooper explains the ramifications. Douglas Isles laments the heavy focus advisers and their clients have on short-term performance and wants to change the conversation. 

Leisa Bell summarises superannuation research from Mercer showing changing work conditions and disengagement by millennials, while at the other end of the age spectrum, Julie Steed explains how to access super when faced with a terminal illness.

The new Alliance for a Fairer Retirement System, established in response to Labor's franking proposal, held its inaugural summit this week, and a summary of discussions is hereJon Kalkman of the Australian Investors Association, who has written many excellent pieces in Cuffelinks on this subject, is the main author of this comprehensive paper to the Standing Committee holding an inquiry into the policy.

Our updated White Papers from Perpetual Investments show how volatility can bring opportunities and what factors caused the recent sell-off, plus with a more local focus, the inaugural edition of the Quarterly Market Insights from the Perpetual Multi Asset team.

To comment on any of the issues raised above, use the Have Your Say section.

Graham Hand, Managing Editor

 

For a PDF version of this week’s newsletter articles, click here.

 


 


 

Leave a Comment:

banner

Most viewed in recent weeks

Why the $5.4 trillion wealth transfer is a generational tragedy

The intergenerational wealth transfer, largely driven by a housing boom, exacerbates economic inequality, stifles productivity, and impedes social mobility. Solutions lie in addressing the housing problem, not taxing wealth.

The 2025 Australian Federal election – implications for investors

With an election due by 17 May, we are effectively in campaign mode with the Government announcing numerous spending promises since January and the Coalition often matching them. Here's what the election means for investors.

Finding the best income-yielding assets

With fixed term deposit rates declining and bank hybrids being phased out, what are the best options for investors seeking income? This goes through the choices, and the opportunities and risks involved.

What history reveals about market corrections and crashes

The S&P 500's recent correction raises concerns about a bear market. History shows corrections are driven by high rates, unemployment, or global shocks, and that there's reason for optimism for nervous investors today. 

Howard Marks: the investing game has changed

The famed investor says the rapid switch from globalisation to trade wars is the biggest upheaval in the investing environment since World War Two. And a new world requires a different investment approach.

Welcome to Firstlinks Edition 605 with weekend update

Trump's tariffs and China's retaliatory strike have sent the Nasdaq into a bear market with the S&P 500 not far behind. What are the implications for the economy and markets, and what should investors do now? 

  • 3 April 2025

Latest Updates

Investment strategies

4 ways to take advantage of the market turmoil

Every crisis throws up opportunities. Here are ideas to capitalise on this one, including ‘overbalancing’ your portfolio in stocks, buying heavily discounted LICs, and cherry picking bombed out sectors like oil and gas.

Shares

Why the ASX needs dual-class shares

The ASX is exploring the introduction of dual class share structures for listed companies. Opposition is building to the plan but the ASX should ignore the naysayers and bring Australia into line with its global peers.

The state of women's wealth in Australia

New research shows the average Australian woman has $428,000 in net wealth, 40% less than the average man. This takes a deep dive into what the gender wealth gap looks like across different life stages.

Investing

The two most dangerous words in investing

Market extremes are where the biggest investment risks and opportunities lie. While events like this are usually only obvious in hindsight, learning to watch out for these two words can alert you to them in real time.

Shares

Investing in the backbone of the digital age

Semiconductors are used to make microchips and are essential to a vast range of technology and devices. This looks at what’s driving demand for chips, how the industry is evolving, and favoured stocks to play the theme.

Gold

Why gold’s record highs in 2025 differ from prior peaks

Gold prices hit new recent highs, driven by a stronger euro, tariff concerns, and steady ETF buying – all while the precious metal’s fundamental backdrop remains solid amid a shifting global economic landscape.

Now might be the best time to switch out of bank hybrids

In this interview, Schroders' Helen Mason discusses investing in corporate and financial credit securities, market impacts of tariffs, opportunities for cash investments, and views on tier two and hybrid bonds.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.